TAX COMPLIANCE CERTIFICATE

Transcription

1 KUTAK DRAFT 12/4/15 TAX COMPLIANCE CERTIFICATE $[ ] State of Colorado, Department of Higher Education by State Board for Community Colleges and Occupational Education Systemwide Revenue Bonds (Red Rocks Community College Project) Series In General. 1.1 The undersigned is the Chair of the State Board for Community Colleges and Occupational Education (the Board ), and hereby certifies to the statements contained herein. 1.2 This Tax Compliance Certificate (this Tax Compliance Certificate ) is executed for the purpose of establishing the reasonable expectations of the Board as to future events regarding $[ ] aggregate principal amount of the Board s Systemwide Revenue Bonds (Red Rocks Community College Project), Series 2016 (the Series 2016 Bonds ) issued under the Master Enterprise Bond Resolution adopted by the Board on December 9, 2009 (the Master Resolution ), as supplemented to the date hereof by the Fifth Supplemental Resolution adopted by the Board on December 9, 2015 (the Fifth Supplemental Resolution, and together with the Master Resolution, the Bond Resolution ). The Board has not been notified of any listing or proposed listing of the Board by the Internal Revenue Service as an issuer that may not certify its bonds. The Board s reasonable expectation that the Series 2016 Bonds are not arbitrage bonds is based upon Section 148 of the Internal Revenue Code of 1986, as amended (the Code ), and the regulations thereunder (the Regulations ). 1.3 The factual representations contained in this Tax Compliance Certificate are true and correct and, to the best of the knowledge, information and belief of the undersigned, the expectations contained in this Tax Compliance Certificate are reasonable. 1.4 The undersigned is an officer of the Board to whom the responsibility of issuing and delivering the Series 2016 Bonds has been delegated. 1.5 Certifications with respect to the structuring of the Series 2016 Bonds and the price and yield calculations referenced in Sections 3 and 7 hereof are based on representations made by North Slope Capital Advisors as financial advisor to the Board (the Financial Advisor ) and by [ ], as underwriter of the Series 2016 Bonds (the Underwriter ), each contained in Exhibits A-1 and A-2 hereto. The Board is not aware of any facts or circumstances that would cause it to question the accuracy of any of the representations made by the Financial Advisor or the Underwriter. 1.6 The restrictions contained in this Tax Compliance Certificate shall apply to the investment and the expenditure of the amounts described herein unless the Board receives an opinion of Bond Counsel to the effect that an amendment to such restrictions will not

2 adversely affect the exclusion of interest on the Series 2016 Bonds from the gross income of the recipients thereof for federal income tax purposes. 1.7 Terms used, but not defined, herein shall have the meanings ascribed to such terms in the Bond Resolution. The following words and phrases shall have the following meanings: Abusive Arbitrage Device means any action which has the effect of (a) enabling the Board to exploit the difference between taxable and tax-exempt interest rates to obtain a material financial advantage; and (b) overburdening the tax-exempt bond market as more particularly set forth in Section of the Regulations. Accounting Method means both the overall method used to account for the Gross Proceeds of the Series 2016 Bonds (e.g., the cash method or a modified accrual method) and the method used to account for or allocate any particular item within that overall accounting method (e.g., accounting for Investments, Expenditures, allocations to and from different sources and particular items of the foregoing). Average Economic Life means the average reasonably expected remaining economic life of the Series 2016 Improvements Project as defined in Section 147(b) of the Code. Average Maturity means the weighted average maturity of the Series 2016 Bonds as defined in Section 147(b) of the Code. Bond Counsel means a law firm of nationally recognized bond counsel who is requested to deliver its approving opinion with respect to the issuance of and the exclusion from federal income taxation of interest on the Series 2016 Bonds. Bond Year means the twelve-month period commencing on November 2 of each calendar year and terminating on November 1 of the immediately succeeding calendar year during the term of the Series 2016 Bonds, and the first Bond Year shall commence on the Date of Issuance of the Series 2016 Bonds and end on November 1, 2016 (unless a different period is required by the Regulations or selected by the Board after the Date of Issuance). Bond Yield means the Yield of the Series 2016 Bonds calculated in accordance with Section of the Regulations. Capital Expenditure means any cost of a type that is properly chargeable to a capital account (or would be so chargeable with a proper election or with the application of the definition of placed in service under Section (c) of the Regulations) under general federal income tax principles. For example, costs incurred to acquire, construct or improve land, buildings and equipment generally are Capital Expenditures. Whether an Expenditure is a Capital Expenditure is determined at the time the Expenditure is paid with respect to the property. Future changes in law do not affect whether an Expenditure is a Capital Expenditure. Capital Project means all Capital Expenditures, plus related working capital expenditures to which the de minimis rule under Section (d)(3)(ii)(A) of the Regulations applies, that carry out the governmental purpose of an issue. For example, a Capital Project may include Capital Expenditures for one or more building improvements or equipment, plus related 2

3 start-up operating costs and capitalized interest through the placed-in-service date for the Capital Project. Class of Investments means one of the following, each of which represents a different Class of Investments: (a) each category of yield restricted Purpose Investment and program investment, as defined in Section (b) of the Regulations, that is subject to a different definition of materially higher Yield under Section (d)(2); (b) (c) yield restricted Nonpurpose Investments; and all other Nonpurpose Investments. Code means the Internal Revenue Code of 1986, as amended. Date. Computation Date means an Installment Computation Date or the Final Computation Computation Date Credit means on the last day of each Bond Year during which there are Gross Proceeds subject to the rebate requirements, and on the Final Computation Date, the amount of $[1,590.00]. The foregoing amount is applicable for calendar year 2016 and is subject to an annual cost-of-living increase in accordance with Prop. Treas. Reg (d)(4). Consistently Applied means applied uniformly within a fiscal period and between fiscal periods to account for Gross Proceeds of an issue and any amounts that are in a commingled fund. Costs of Issuance means all costs incurred in connection with the issuance of the Series 2016 Bonds, other than Qualified Guarantee Fees. Examples of Costs of Issuance include (but are not limited to): (a) underwriters spread and fees (whether realized directly or derived through purchase of the Series 2016 Bonds at a discount below the price at which a substantial number of the Series 2016 Bonds are sold to the public); (b) counsel fees (including bond counsel, original purchaser s counsel, Board s counsel, and any other specialized counsel fees incurred in connection with the issuance of the Series 2016 Bonds); (c) rating agency fees (except for any such fee that is paid in connection with or as a part of the fee for credit enhancement of the Series 2016 Bonds); (d) trustee or paying agent fees incurred in connection with the issuance of the Series 2016 Bonds; (e) 2016 Bonds; accountant fees incurred in connection with the issuance of the Series 3

4 (f) printing costs (for the Series 2016 Bonds and of the preliminary and final Official Statements); (g) costs incurred in connection with the required public approval process (e.g., publication costs for public notices generally and costs of the public hearing); and (h) the Board s fees to cover administrative costs and expenses incurred in connection with the issuance of the Series 2016 Bonds. Current Outlay of Cash means an outlay reasonably expected to occur not later than five banking days after the date as of which the allocation of Gross Proceeds to the Expenditure is made. Date of Issuance means February [ ], Debt Service Fund means the portion of the Debt Service Fund established by the Board pursuant to the Bond Resolution applicable the Series 2016 Bonds including the Series 2016 Interest Account and Series 2016 Principal Account. Discharged means, with respect to any Series 2016 Bond, the date on which all amounts due with respect to such Series 2016 Bond is actually and unconditionally due, if cash is available at the place of payment, and no interest accrues with respect to such Series 2016 Bond after such date. Economic Accrual Method (also known as the constant interest method or actuarial method) means the method of computing Yield that is based on the compounding of interest at the end of each compounding period. Exempt Person means any State or a local governmental unit of the State. Expenditure means a book or record entry which allocates Proceeds of the Series 2016 Bonds in connection with a Current Outlay of Cash. Fair Market Value means the price at which a willing buyer would purchase an Investment from a willing seller in a bona fide, arm s-length transaction. Fair Market Value generally is determined on the date on which a contract to purchase or sell the Nonpurpose Investment becomes binding (i.e., the trade date rather than the settlement date). Except as otherwise provided in this definition, an Investment that is not of a type traded on an established securities market (within the meaning of Section 1273 of the Code), is rebuttably presumed to be acquired or disposed of for a price that is not equal to its Fair Market Value. The Fair Market Value of a United States Treasury obligation that is purchased directly from the United States Treasury is its purchase price. The following guidelines shall apply for purposes of determining the Fair Market Value of the obligations described below: (a) Certificates of Deposit. The purchase of certificates of deposit with fixed interest rates, fixed payment schedules and substantial penalties for early withdrawal will be deemed to be an Investment purchased at its Fair Market Value on the purchase date if the Yield on the certificate of deposit is not less than: 4

5 (i) the Yield on reasonably comparable direct obligations of the United States; and (ii) the highest Yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the public. (b) Guaranteed Investment Contracts. A Guaranteed Investment Contract is a Nonpurpose Investment that has specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate, and also includes any agreement to supply Investments on two or more future dates (e.g., a forward supply contract). The purchase price of a Guaranteed Investment Contract is treated as its Fair Market Value on the purchase date if: (i) the Board makes a bona fide solicitation for a specified Guaranteed Investment Contract and receives at least three bona fide bids from providers that have no material financial interest in the issue (e.g., as underwriters or brokers); (ii) the Board purchases the highest-yielding Guaranteed Investment Contract for which a qualifying bid is made (determined net of broker s fees); (iii) the Yield on the Guaranteed Investment Contract (determined net of broker s fees) is not less than the Yield then available from the provider on reasonably comparable Guaranteed Investment Contracts, if any, offered to other persons from a source of funds other than gross proceeds of tax-exempt bonds; (iv) the determination of the terms of the Guaranteed Investment Contract takes into account as a significant factor the Board s reasonably expected drawdown schedule for the amounts to be invested, exclusive of amounts deposited in debt service funds and reasonably required reserve or replacement funds; (v) the terms of the Guaranteed Investment Contract, including collateral security requirements, are reasonable; and (vi) the obligor on the Guaranteed Investment Contract certifies the administrative costs that it is paying (or expects to pay) to third parties in connection with the Guaranteed Investment Contract. Final Computation Date means the date the last Series 2016 Bond is Discharged. Future Value means the Value of a Receipt or Payment at the end of any interval as determined by using the Economic Accrual Method and equals the Value of that Payment or Receipt when it is paid or received (or treated as paid or received), plus interest assumed to be earned and compounded over the period at a rate equal to the Bond Yield, using the same compounding interval and financial conventions used to compute the Bond Yield. Gross Proceeds means any Proceeds or Replacement Proceeds of the Series 2016 Bonds. 5

6 Installment Computation Date means November 1, 2020, and the last day of each succeeding fifth Bond Year. Investment means any Purpose Investment or Nonpurpose Investment, including any other tax-exempt bond. Investment Instructions means the letter of instructions set forth as Exhibit B to this Tax Compliance Certificate dated the Date of Issuance. Investment Proceeds means any amounts actually or constructively received from investing Proceeds of the Series 2016 Bonds. Investment-Type Property means any property, other than property described in Section 148(b)(2)(A), (B), (C) or (E) of the Code that is held principally as a passive vehicle for the production of income. Except as otherwise provided, a prepayment for property or services is Investment-Type Property if a principal purpose for prepaying is to receive an investment return from the time the prepayment is made until the time payment otherwise would be made. A prepayment is not Investment-Type Property if: (a) the prepayment is made for a substantial business purpose other than investment return and the Board has no commercially reasonable alternative to the prepayment; or (b) prepayments on substantially the same terms are made by a substantial percentage of persons who are similarly situated to the Board but who are not beneficiaries of tax-exempt financing. Issue Price means, except as otherwise provided, issue price as defined in Sections 1273 and 1274 of the Code. Generally, the Issue Price of bonds that are publicly offered is the first price at which a substantial amount of the bonds is sold to the public. Ten percent is a substantial amount. The public does not include bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers. The Issue Price does not change if part of the issue is later sold at a different price. The Issue Price of bonds that are not substantially identical is determined separately. The Issue Price of bonds for which a bona fide public offering is made is determined as of the sale date based upon reasonable expectations regarding the initial public offering price. If a bond is issued for property, the applicable Federal tax-exempt rate is used in lieu of the Federal rate in determining the Issue Price under Section 1274 of the Code. The Issue Price of bonds may not exceed their Fair Market Value as of the sale date. The Issue Price of the Series 2016 Bonds is $[ ]. Net Sale Proceeds means Sale Proceeds, less the portion of those Sale Proceeds invested in a reasonably required reserve or replacement fund under Section 148(d) of the Code and as part of a minor portion under Section 148(e) of the Code. Nonpurpose Investment means any security, obligation, annuity contract or Investment-Type Property as defined in Section 148(b) of the Code, including specified private activity bonds as defined in Section 57(a)(5)(C) of the Code, but excluding all other obligations the interest on which is excludible from federal gross income. 6

7 Payments means, for purposes of computing the Rebate Amount, (a) amounts actually or constructively paid to acquire a Nonpurpose Investment (or treated as paid to a commingled fund); (b) for a Nonpurpose Investment that is allocated to an issue on a date after it is actually acquired (e.g., an Investment that becomes allocable to Transferred Proceeds or to Replacement Proceeds) or that becomes subject to the rebate requirement of the Code on a date after it is actually acquired (e.g., an Investment allocated to a reasonably required reserve or replacement fund for a construction issue at the end of the two-year spending period), the Value of that Investment on that date; (c) for a Nonpurpose Investment that was allocated to an issue at the end of the preceding computation period, the Value of that Investment at the beginning of the computation period; (d) on the last day of each Bond Year during which there are amounts allocated to Gross Proceeds of an issue that are subject to the rebate requirement of the Code, and on the final maturity date, a Computation Date Credit; and (e) Yield Reduction Payments on Nonpurpose Investments made pursuant to Section (c) of the Regulations. For purposes of computing the Yield on an Investment (including the Value of the Investment), Payment means amounts to be actually or constructively paid to acquire the Investment; provided, however, that payments made by a conduit borrower are not treated as paid until the conduit borrower ceases to receive the benefit of earnings on those amounts. Payments on Investments, including Guaranteed Investment Contracts, are adjusted for Qualified Administrative Costs of acquiring a Nonpurpose Investment. Pre-Issuance Accrued Interest means amounts representing interest that accrued on an obligation for a period not greater than one year before the Date of Issuance but only if those amounts are paid within one year after the Date of Issuance. Proceeds means any Sale Proceeds, Investment Proceeds and Transferred Proceeds of an issue. Proceeds do not include, however, amounts actually or constructively received with respect to a Purpose Investment that are properly allocable to the immaterially higher Yield under Section (d) of the Regulations or Section 143(g) of the Code or to qualified administrative costs recoverable under Section (e) of the Regulations. Purpose Investment means an Investment that is acquired to carry out the governmental purpose of an issue. Qualified Administrative Costs means reasonable, direct administrative costs, other than carrying costs, such as separately stated brokerage or selling commissions that are comparable to those charged nongovernmental entities in transactions not involving tax-exempt bond proceeds, excluding legal and accounting fees, recordkeeping, custody or similar costs. In addition, certain indirect administrative costs may be characterized as Qualified Administrative Costs with respect to Nonpurpose Investments in publicly offered regulated investment companies and certain external commingled funds, as defined in Section (e)(2)(ii) of the Treasury Regulations. For a guaranteed investment contract, a broker s commission or similar fee paid on behalf of either an issuer or the provider is a Qualified Administrative Cost to the extent that the amount of the broker s commission or similar fee does not exceed the lesser of (i) $[39,000] and (ii).2% of the amount of Gross Proceeds the issuer expects, as of the date the guaranteed investment contract is acquired, to be deposited into the guaranteed investment contract over the term of such guaranteed investment contract or, if such amount does not exceed $4,000, then $4,000. With respect to all guaranteed investment contracts and investments for yield restricted defeasance escrows allocated to Gross Proceeds, the aggregate amount of 7

8 broker s commissions and fees which may be treated as Qualified Administrative Costs cannot exceed $[110,000]. The foregoing limitations are effective for calendar year 2016 and may be adjusted annually for cost-of-living as provided in the Regulations. Qualified Guarantee Fees means reasonable fees properly allocable to payments for a qualified guarantee for an issue as defined in Section (f) of the Regulations. Qualified Hedging Transaction means a contract which meets the requirements of Section (h)(2) of the Regulations. Rebate Amount means the excess of the Future Value of all Receipts on Nonpurpose Investments over the Future Value of all the Payments on Nonpurpose Investments. Future Value is computed as of the Computation Date. Rebate Amount additionally includes any penalties and interest on underpayments reduced for recoveries of overpayments. Rebate Analyst means the entity, if any, chosen by the Board to determine the amount of required deposits to the Rebate Fund, if any. Rebate Fund means the portion of the Rebate Fund established pursuant to the Bond Resolution applicable the Series 2016 Bonds including Series 2016 Rebate Account, as well as any other fund or account established to pay rebate with respect to the Series 2016 Bonds. Receipts means, for purposes of computing the Rebate Amount, (a) amounts actually or constructively received from a Nonpurpose Investment (including amounts treated as received from a commingled fund), such as earnings and return of principal; (b) for a Nonpurpose Investment that ceases to be allocated to an issue before its disposition or redemption date (e.g., an Investment that becomes allocable to Transferred Proceeds of another issue or that ceases to be allocable to the issue pursuant to the universal cap under of the Regulations) or that ceases to be subject to the rebate requirement of the Code on a date earlier than its disposition or redemption date (e.g., an Investment allocated to a fund initially subject to the rebate requirement of the Code but that subsequently qualifies as a bona fide debt service fund), the Value of that Nonpurpose Investment on that date; and (c) for a Nonpurpose Investment that is held at the end of a computation period, the Value of that Investment at the end of that period. For purposes of computing Yield on an Investment, Receipts means amounts to be actually or constructively received from the Investment, such as earnings and return of principal (including the Value of an Investment). Receipts on Investments, including Guaranteed Investment Contracts, are adjusted (reduced) for Qualified Administrative Costs. Recomputation Event means a transfer, waiver, modification or similar transaction of any right that is part of the terms of the Series 2016 Bonds or a Qualified Hedging Transaction is entered into, or terminated, in connection with the Series 2016 Bonds. Regulation or Regulations means the temporary, proposed or final Income Tax Regulations promulgated by the Department of the Treasury and applicable to the Series 2016 Bonds, including Sections through , Section and Sections and as issued by the Internal Revenue Service. Replacement Proceeds means amounts which have a sufficiently direct nexus to the Series 2016 Bonds or to the governmental purpose of the Series 2016 Bonds to conclude that the 8

9 amounts would have been used for that governmental purpose if the Proceeds of the Series 2016 Bonds were not used or to be used for that governmental purpose, as more fully defined in (c) of the Regulations. Sale Proceeds means any amounts actually or constructively received from the sale of the Series 2016 Bonds, including amounts used to pay underwriters discount or compensation and accrued interest other than Pre-Issuance Accrued Interest. Series 2016 Bonds means the $[ ] principal amount of the Series 2016 Bonds issued under the Bond Resolution and designated as the State of Colorado, Department of Higher Education by State Board for Community Colleges and Occupational Education Systemwide Revenue Bonds (Red Rocks Community College Project), Series Series 2016 Expense Account means the Series 2016 Expense Account created under the Bond Resolution. Series 2016 Improvements Project means the Capital Expenditures to be financed with Proceeds of the Series 2016 Bonds as more fully described in Exhibit D hereto. Series 2016 Improvements Project Account means the portion of the Series 2016 Improvements Project Account established pursuant to the Fifth Supplemental Resolution allocable to the Series 2016 Bonds. State means the State of Colorado. Transferred Proceeds means Proceeds of a refunding issue which become transferred proceeds of a refunding issue and cease to be Proceeds of a prior issue when Proceeds of the refunding issue discharge any of the outstanding principal amount of the prior issue. The amount of Proceeds of the prior issue that become transferred proceeds of the refunding issue is an amount equal to the Proceeds of the prior issue on the date of that discharge multiplied by a fraction: (a) the numerator of which is the principal amount of the prior issue discharged with Proceeds of the refunding issue on the date of that discharge; and (b) the denominator of which is the total outstanding principal amount of the prior issue on the date immediately before the date of that discharge. Universal Cap means the Value of all outstanding Series 2016 Bonds. Value means Value as determined under Section (e) of the Regulations for a Bond and Value determined under Section (d) of the Regulations for an Investment. Yield means, for purposes of determining the Bond Yield, the Yield computed under the Economic Accrual Method using consistently applied compounding intervals of not more than one year. A short first compounding interval and a short last compounding interval may be used. Yield is expressed as an annual percentage rate that is calculated to at least four decimal places (e.g., percent). Other reasonable, standard financial conventions, such as the 30 days per month/360 days per year convention, may be used in computing Yield but must be 9

10 consistently applied. The Yield on an issue that would be a Purpose Investment (absent Section 148(b)(3)(A) of the Code) is equal to the Yield on the conduit financing issue that financed that Purpose Investment. The Yield on a fixed yield issue is the discount rate that, when used in computing the present value as of the issue date of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the issue and amounts reasonably expected to be paid as fees for qualified guarantees on the issue, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of bonds of the issue as of the issue date. In the case of obligations purchased or sold at a substantial discount or premium, the Regulations prescribe certain special Yield calculation rules. For purposes of determining the Yield on an Investment, the Yield computed under the Economic Accrual Method, using the same compounding interval and financial conventions used to compute the Bond Yield. The Yield on an Investment allocated to the Series 2016 Bonds is the discount rate that, when used in computing the present Value as of the date the Investment is first allocated to the Series 2016 Bonds of all unconditionally payable receipts from the Investment, produces an amount equal to the present value of all unconditionally payable payments for the Investment. The Yield on an Investment shall not be adjusted by any hedging transaction entered into in connection with such Investment unless the Board has received an opinion of Bond Counsel that such an adjustment is permitted by the Regulations. Yield shall be calculated separately for each Class of Investments. Yield Reduction Payment means a payment to the United States with respect to an Investment which is treated as a Payment for that Investment that reduces the Yield on that Investment in accordance with Section (c) of the Regulations. Yield Reduction Payments include Rebate Amounts paid to the United States. 1.8 Reliance on Board Information. Bond Counsel shall be permitted to rely, after due inquiry, upon the contents of any certification, document or instructions provided pursuant to this Tax Compliance Certificate and shall not be responsible or liable in any way for the accuracy of their contents or the failure of the Board to deliver any required information. 2. The Purpose of the Series 2016 Bonds. 2.1 The Series 2016 Bonds are being issued for the purpose of providing funds to (a) construct and equip a new student recreation center to be located on the Lakewood campus and any other capital improvements to the Colorado Community College System; (b) refund all of the Board s Systemwide Revenue Bonds (Pikes Peak Community College Project), Series 2003; and (c) pay the costs and expenses associated with the issuance of the Series 2016 Bonds. 2.2 The Average Maturity of the Series 2016 Bonds ([ ] years) does not exceed 120% of the Average Economic Life of the Series 2016 Improvements Project. The Board does not expect that the plan of financing relating to the Series 2016 Bonds will result in the creation of any replacement proceeds within the meaning of Section (c) of the Regulations. 2.3 On the Date of Issuance of the Series 2016 Bonds, the Board reasonably expects to spend at least 85 percent of the spendable proceeds of the Series 2016 Bonds on 10

11 governmental purposes within three years of the Date of Issuance of the Series 2016 Bonds. Additionally, the Board will not invest more than 50 percent of the Proceeds of the Series 2016 Bonds in Nonpurpose Investments having a guaranteed yield for four or more years. 2.4 The Refunded Bonds are being current refunded to reduce the net effective interest rate and generate present value debt service and annual cash flow savings. The Series 2003 Bonds will be entirely redeemed on February, 2016 at a redemption price equal to 100% of the par amount thereof plus accrued interest to the redemption date. As of the Date of Issuance, there are no remaining unspent proceeds of the Series 2003 Bonds. Officers of the Board have reviewed its books and records for the Series 2003 Bonds, and have confirmed to the undersigned that the proceeds of the Series 2003 Bonds were actually expended for the purposes described in the transcript of proceedings for the Series 2003 Bonds. 3. Source and Disbursement of Funds. 3.1 The Series 2016 Bonds will be sold to the Underwriter for a purchase price of $[ ], constituting the $[ ] par amount of the Series 2016 Bonds, less an underwriter s discount of $[ ], plus a net original issue premium of $[ ] (the Sale Proceeds ). There is no Pre-Issuance Accrued Interest on the Series 2016 Bonds. 3.2 The $[ ] of Sale Proceeds are expected to be needed and fully expended as follows: (a) $[ ] of Sale Proceeds will be deposited in the Series 2016 Improvements Project Account to finance the Series 2016 Improvements Project; and (b) $[ ] of Sale Proceeds will be deposited in the Series 2016 Refunding Project Account to refund the Series 2003 Bonds. (c) $[ ] of Sale Proceeds will be deposited in the Series 2016 Expense Account and expended on payment of the costs anticipated to be incurred in connection with the issuance of the Series 2016 Bonds. 4. Temporary Period and Investments for Certain Proceeds; Series 2016 Expense Account; Series 2016 Improvements Project Account. 4.1 The portion of the Sale Proceeds of the Series 2016 Bonds deposited to the Series 2016 Expense Account and used to pay Costs of Issuance will be spent within a one year period beginning on the Date of Issuance. The Sale Proceeds described in the preceding sentence may be invested without regard to investment yield limitation for a period of one year following the Date of Issuance of the Series 2016 Bonds, and thereafter, at a yield in not excess of one-eighth of one percent (.125%) above the Yield on the Series 2016 Bonds. 4.2 Within six months after the Date of Issuance of the Series 2016 Bonds, the Board will enter into contracts with third parties for the Series 2016 Improvements Project obligating expenditures in excess of 5% of the Net Sale Proceeds of the Series 2016 Bonds. The Board will proceed with due diligence to complete the Series 2016 Improvements Project. 11

12 4.3 The Sale Proceeds of the Series 2016 Bonds deposited in the Series 2016 Improvements Project Account are expected to be expended for payment of costs which are directly related to and necessary for the financing of the Capital Expenditures for the Series 2016 Improvements Project substantially in accordance with the schedule set forth in Exhibit D hereto. 4.4 Sale Proceeds deposited in the Series 2016 Improvements Project Account may be invested in obligation that bear a Yield in excess of the Bond Yield until the date which is three years from the Date of Issuance, and thereafter, may not be invested in obligations which bear a yield in excess of one eight of one percent (.125%) above the Yield of the Series 2016 Bonds. Any interest earnings or investment gains realized from the investment of the amounts described in subparagraph (a) may be reinvested pending disbursement in obligations that bear a yield in excess of the Yield on the Series 2016 Bonds. The period of unrestricted investment of such earnings will not exceed the longer of (a) a one-year period beginning on the date of receipt of such investment or (b) the period ending on the date which is three years from the Date of Issuance. After the period of unrestricted reinvestment of investment earnings described in the Subsection, such earnings will not be invested in obligations that bear a Yield in excess of oneeighth of one percent (.125%) above the Bond Yield. Such investment savings or investment gains will be expended on the Series 2016 Improvements Project. 4.5 Investments described in this Section are to the extent required by the Code subject to the rebate requirements of Section 8 of this Tax Compliance Certificate. 5. Debt Service Fund. Amounts deposited in the Debt Service Fund are to be expended to pay principal of and interest on the Series 2016 Bonds as the same become due and will be depleted at least once a year (except for a reasonable carryover amount not to exceed the greater of one twelfth of the annual debt service on the Series 2016 Bonds or one year s interest earnings on such funds). Accordingly, the Debt Service Fund constitutes a bona fide debt service fund. It is reasonably expected that all amounts received by the Board as income from the investment of such portions of the Debt Service Fund will be expended to pay the principal of and interest on the Series 2016 Bonds within one year of receipt thereof. Such amounts deposited to the Debt Service Fund may be invested without regard to investment yield limitation for a period of thirteen months (13) from the date of deposit therein, and thereafter (or at any time to the extent such amounts exceed those amounts set forth in the first sentence of this paragraph), may not be invested in obligations bearing a Yield in excess of the Bond Yield. 6. Arbitrage Representations and Elections. 6.1 The Board will use a reasonable, Consistently Applied Accounting Method to account for Gross Proceeds, Investments and Expenditures for the Series 2016 Bonds. The Board shall additionally use a Consistently Applied Accounting Method for allocating Proceeds of the Series 2016 Bonds to Expenditures, subject to the Current Outlay of Cash rule. 6.2 The Board shall not commingle Proceeds of the Series 2016 Bonds with any other funds. 6.3 In connection with the Series 2016 Bonds, there has not been created or established and the Board does not expect that there will be created or established, any sinking 12

13 fund, pledged fund or similar fund (other than as specifically identified in the Bond Resolution), including without limitation any arrangement under which money, securities or obligations are pledged directly or indirectly to secure the Series 2016 Bonds or any contract securing the Series 2016 Bonds or any arrangement providing for compensating or minimum balances to be maintained by the Board with any owner or credit enhancer of the Series 2016 Bonds. 6.4 The Board will not enter into or engage in any Abusive Arbitrage Devices. If the Board invests any of the Gross Proceeds in certificates of deposit or pursuant to an investment contract or a certificate of deposit, the Board will comply with the certifications in the form attached hereto as Exhibits C-1 through C The Board hereby makes the following elections and other choices pursuant to the Regulations with respect to the Series 2016 Bonds: Year; (a) the Board elects the bond year stated in the definition of the Bond (b) the Board elects to avail itself of all unrestricted yield investments granted in the Regulations for temporary period, reasonably required reserve fund and minor portion investments; (c) the Board elects to treat the last day of the fifth Bond Year (November 1, 2020) as the initial Installment Computation Date and the initial rebate payment date. The Board elects to treat the last day of each subsequent fifth Bond Year as subsequent Installment Computation Dates and subsequent rebate payment dates. The Board may change or adjust such dates as permitted by the Regulations; and (d) with respect to the Universal Cap, the Board as of the Date of Issuance does not expect that the operation of the Universal Cap will result in a reduction or reallocation of Gross Proceeds of the Series 2016 Bonds and that the Board (i) does not expect to pledge funds (other than those described in the Bond Resolution) to the payment of the Series 2016 Bonds; (ii) expects to expend Sale Proceeds of the Series 2016 Bonds within the expected temporary periods; and (iii) does not expect to retire any of the Series 2016 Bonds earlier than shown in the Yield computations for the Series 2016 Bonds. (e) Rebate Account. Moneys that are not Gross Proceeds of the Series 2016 Bonds deposited to the Rebate Account and the earnings thereon may be invested without regard to investment and are not subject to the rebate requirements of Section 148(f) of the Code as described in the Investment Instructions attached as Exhibit B hereto. Investment Proceeds of the Series 2016 Bonds deposited in the Rebate Account may be invested without regard to investment yield limitation from a one year period beginning on the date of receipt, and thereafter, at a yield not in excess of the Yield on the Series 2016 Bonds. Investment of such Proceeds of the Series 2016 Bonds are subject to the rebate requirements of Section 148(f) of the Code as described in the Investment Instructions attached as Exhibit B hereto. 13

14 7. Price and Yield of the Series 2016 Bonds. 7.1 The Underwriter has represented in the Certificate of Underwriter attached as Exhibit A hereto that the initial offering price to the public (excluding bond houses, brokers and other intermediaries) at which a substantial amount of the Series 2016 Bonds were sold is $[ ], which is the par amount of the Series 2016 Bonds plus original issue premium of $[ ]. There is no Pre-Issuance Accrued Interest on the Series 2016 Bonds. 7.2 As used in this Certificate, the term yield refers to the discount rate which, when used in computing the present value of all payments of principal and interest to be paid on an obligation, produces an amount equal to the issue price. The calculations of Yield have been made on the basis of semiannual compounding using a 360-day year and upon the assumption that payments are made on the last day of each semiannual interest payment Date. For purposes of computing yield, the purchase price of any obligation is equal to the fair market value as of the date of a binding contract to acquire such obligation. The Underwriter has represented in the Certificate of Underwriter attached as Exhibit A hereto that the Yield on the Series 2016 Bonds is not less than [ ]%. 8. Rebate Requirement and Investment Instructions. 8.1 Arbitrage Compliance. The Board acknowledges that the continued exclusion of interest on the Series 2016 Bonds from gross income of the recipients thereof for purposes of federal income taxation depends, in part, upon compliance with the arbitrage limitations imposed by Section 148 of the Code, including the rebate requirement described in Section 148(f) of the Code. The Board hereby agrees and covenants that it shall not permit at any time or times any of the Gross Proceeds of the Series 2016 Bonds or other funds of the Board to be used, directly or indirectly, to acquire any asset or obligation, the acquisition of which would cause the Series 2016 Bonds to be arbitrage bonds for purposes of Section 148 of the Code. The Board further agrees and covenants that it shall do and perform all acts and things necessary in order to ensure that the requirements of Section 148 of the Code and the Regulations are met, including the payment to the United States of America of the required portion of the Rebate Amount as of each Computation Date. To that end, the Board may retain, at its own expense, a Rebate Analyst to make such determinations and calculations as may be necessary in order to ensure that the Board takes the actions described in the Investment Instructions with respect to the Investment of Gross Proceeds on deposit in the funds and accounts established under the Bond Resolution. The provisions of the Investment Instructions are by this reference expressly incorporated herein. The Board has covenanted that it will comply with the Investment Instructions and the Board expects that it will so comply. 8.2 Pursuant to this Tax Compliance Certificate, the Board will establish such Accounting Methods and keep all such records as are necessary to determine any Rebate Amount for a period of at least four years after the later of the final retirement of the Series 2016 Bonds or any obligation issued to refund the Series 2016 Bonds. 9. Miscellaneous. 9.1 Change in Ownership of the Series 2016 Improvements Project. The Board intends either to own the Series 2016 Improvements Project at all times during the term of 14

15 the Series 2016 Bonds, or to sell or lease portions of the Series 2016 Improvements Project, but only to other governmental units and in a manner that does not result in the inclusion of interest on the Series 2016 Bonds in the gross income of the owners thereof for federal income tax purposes. The Board does not know of any reason why the Series 2016 Improvements Project will not be so used in the absence of (a) supervening circumstances not now anticipated by it, (b) adverse circumstances beyond its control, or (c) obsolescence of such insubstantial portions thereof as may occur as a result of normal use thereof. The Board will not change the use, ownership or nature of any portion of the Proceeds of the Series 2016 Bonds or the Series 2016 Improvements Project so long as any of the Series 2016 Bonds are outstanding unless, in the written opinion of Bond Counsel, such change will not result in the inclusion of interest on the Series 2016 Bonds in the gross income of the recipient thereof for purposes of federal income taxation, except that the Board may without an opinion sell or otherwise dispose of minor portions of the Series 2016 Improvements Project as may be necessary due to normal obsolescence. 9.2 Representations as to Limits on the Use of Proceeds. In order to ensure that interest on the Series 2016 Bonds is excludable from the gross income of the recipients thereof for purposes of federal income taxation, the Board hereby covenants as follows: (a) The Board will not take or permit to be taken any action which would cause the Series 2016 Bonds to be deemed private activity bonds under the Code. The Series 2016 Bonds will be considered private activity bonds if: (i) more than 10% of the Proceeds of the Series 2016 Bonds is used directly or indirectly in the business of a nongovernmental person, and (ii) more than 10% of the debt service on the Series 2016 Bonds is directly or indirectly (A) secured by any interest in property used in a private business or (B) derived from payments made with respect to property used in a private business. No more than 5% of any such private use and any such private security for or private payment of the Series 2016 Bonds may be unrelated or disproportionate to the Series 2016 Improvements Project. Series 2016 Bonds will be considered private activity bonds if more than the lesser of 5% of proceeds of the Series 2016 Bonds or $5,000,000 is loaned to non-exempt Persons. (b) The Board will not permit payment of the principal of or the interest on more than 10% of the Series 2016 Bonds (under the terms of such Series 2016 Bonds or any underlying arrangement) to be directly or indirectly secured by any interest in property used or to be used for a private business use (or by any interest in payments in respect of such property), or to be derived from payments (whether or not to the Board) in respect of property (or borrowed money) used or to be used for a private business use. In the event that Proceeds of the Series 2016 Bonds are to be used for any private business use that is not related (or is disproportionate) to any government use of such Proceeds and the Series 2016 Improvements Project (and to payments, property and borrowed money with respect to any such private business use), the preceding covenant shall apply but not more than 5% (rather than 10%) of the Series 2016 Bonds may be so secured. This requirement is referred to herein as the private payment test. 15

16 In determining whether the Series 2016 Bonds meet the private payment test, the Board will compare the present value of the payments taken into account to the present value of the debt service to be paid over the term of the Series 2016 Bonds. Debt service will include reasonable credit enhancement fees but will not include any amount to be paid from Proceeds of the Series 2016 Bonds. For example, debt service will not include accrued interest or other amounts to be paid with Proceeds of the Series 2016 Bonds. For purposes of the discount rate to be applied in such present value calculations, the Yield on the Series 2016 Bonds has been computed by the Underwriter to be [ ]%. Payments taken into account in determining whether the Series 2016 Bonds meet the private payment test will include payments made for any private business use and payments in respect of property financed (directly or indirectly) with Proceeds of the Series 2016 Bonds. However, any payment that is properly allocable to the payment of ordinary or necessary expenses directly attributable to the operation and maintenance of the Series 2016 Improvements Project (other than general overhead or administrative expenses) will not be included as a payment taken into account. Similarly, payments by a person for use of Proceeds will only be included to the extent that the present value of such payments does not exceed the present value of the debt service allocable to that person s use of Proceeds. For example, if 10% of the Proceeds of the Series 2016 Bonds were used by a person, payments by such person would not be taken into account to the extent that the present value of such payments exceeded the present value of 10% of the debt service on the Series 2016 Bonds. For purposes of the business use test, certain incidental uses of a facility may be disregarded to the extent that the Proceeds of the Series 2016 Bonds which result in the incidental use do not exceed 2½% of the total Proceeds of the Series 2016 Bonds. The use of a facility by a person will be treated as an incidental use if such use does not involve the transfer to such person of possession and control of space that is separated physically from other areas of the facility and is not related to any other use of the facility by the same person. For example, use of space in common areas of an office building for coin-operated telephones, advertising displays, vending machines or a newsstand or shoe shine stand may be disregarded. (c) The Series 2016 Bonds are not and shall not become directly or indirectly federally guaranteed. Series 2016 Bonds will be considered to be federally guaranteed if (i) the payment of principal or interest with respect to such Series 2016 Bonds is guaranteed (in whole or in part) by the United States of America (or any agency or instrumentality thereof), (ii) 5% or more of the Proceeds of the Series 2016 Bonds is (A) used in making loans the payment of principal or interest with respect to which is guaranteed (in whole or in part) by the United States or any agency or instrumentality thereof) or (B) invested (directly or indirectly) in federally insured deposits or accounts, or (iii) the payment of principal or interest on the Series 2016 Bonds is otherwise indirectly guaranteed (in whole or in part) by the United States (or an agency or instrumentality thereof). 16

17 (d) The Board shall file Internal Revenue Form 8038-G pursuant to Section 149(e) of the Code. (e) The Board will not allow the Series 2016 Improvements Project to be used in the trade or business of any person who is a non-exempt Person unless it seeks an opinion of Bond Counsel that such use would not adversely affect the tax-exemption of interest on the Series 2016 Bonds. The Board acknowledges that in determining whether all or any portion or function of the Series 2016 Improvements Project is used, directly or indirectly, in the trade or business of a non-exempt Person, use of any portion or function of the Series 2016 Improvements Project by a non-exempt Person pursuant to a lease, sublease, management contract, research contract, service contract or other arrangement must be examined. A lease, sublease, management contract, service contract or other arrangement between the Board and a non-exempt Person with respect to the Series 2016 Improvements Project or any portion or function thereof will not result in the Series 2016 Improvements Project being used for federal income tax purposes in the trade or business of the non-exempt Person if the guidelines set forth in Rev. Proc and the Regulations are met. (f) The Board shall keep records of the expenditure of Gross Proceeds of the Series 2016 Bonds on the Series 2016 Improvements Project. Such records as are maintained by the Board may, at the option of the Board be maintained by electronic filing or record keeping systems. 9.3 Representations by the Board for Purposes of IRS Form 8038-G. Section 149(e) of the Code requires as a condition to qualification for tax-exemption that the Board provide to the Secretary of the Treasury certain information with respect to the Series 2016 Bonds and the application of the proceeds derived therefrom. The following representations of the Board will be relied upon by Bond Counsel in satisfying this information reporting requirement. Accordingly, the Board hereby represents, covenants and warrants to the best of its knowledge, for the benefit of Bond Counsel and the registered owners of the Series 2016 Bonds, the truth and accuracy of (a) through (n) below: (a) Board s employer identification number (b) Issue Price of the Series 2016 Bonds exclusive of Accrued Interest... $[ ] (c) Proceeds used for Accrued Interest... $-0- (d) Costs of Issuance (including Underwriter s Discount)... $[ ] (e) Proceeds used for Credit Enhancement... $-0- (f) Proceeds used to advance refund prior issue... $-0- (g) Proceeds used to current refund prior issue... $[ ] (h) Proceeds used to fund a reserve fund... $-0-17